"I am sure that Microsoft will do an excellent job of misinforming the public

about the reasons for this
decision, and so I want to put the record straight."

- Keith Teare,

Former CEO & currently
overpaid "consultant" to RealNames

The man whose photograph
appears above,
Keith Teare, is the former CEO of
RealNames Corporation, an insolvent dot com company that closed its doors
last week when its two year Keyword distribution agreement with Microsoft
expired. Since that time, Mr. Teare has been making a significant amount
of noise on the web and in the media,
purporting to "set the record straight" regarding the reasons why his company
shut down. His argument is both as familiar to Silicon Valley observers as
it is tired and overused -- "Hey, Microsoft did it!"

Now whenever I hear of a
business blaming Microsoft for its untimely doing in, I smell a scapegoat argument. It
works like this: If you screw something up royally, find someone that
is universally despised, shift the blame, and play the
role of the poor victim. Scapegoating has a
long and colorful history.
In blaming Microsoft for the world's troubles, I am reminded of all of
the public companies in late 2001 that
blamed poor earnings results on the September terrorist attacks. While
admittedly not hated as much as the Al Qaeda terrorists who piloted their missiles
into occupied office buildings, Microsoft is nonetheless an entity that has
become accustomed to public vilification. Add to this the fact that
Microsoft was RealNames' largest shareholder and lender, as well as its most
significant business partner, and you have the makings of a juicy conspiracy
theory. What you also have is a perfect scapegoat.

How convenient for Mr.
Teare.

The mainstream media would
like you to believe that big, bad Microsoft never innovates, and that it simply
goes around crushing small companies and stealing their technologies. The
US Department of Justice and several states have spent a lot of effort
successfully making the case against Microsoft as a monopolist. Thus, the
scapegoat argument goes, if Microsoft is an evil monopolist, then surely it must
be the cause of RealNames' failure, not RealNames' own poor decision making and
inability to execute.

How nice for Mr. Teare if
this conspiracy theory were true -- it would shift the public inquiry around the
company's failure to Microsoft, thereby allowing Mr. Teare to avoid personal
scrutiny for the total evaporation of the over $130 million dollars of
venture capital invested into RealNames since late 1998. The problem is,
the tale just isn't true. Admittedly, Microsoft is no angel, having been found
to have engaged in monopolistic behavior in other contexts. Yet RealNames
did not fail because of trickery, deception or predation engaged in by
Microsoft. Rather, RealNames failed for many of the same reasons other dot
coms failed: overspending in the face of unattainable, pie-in-the-sky
revenue projections, a CEO with incredible hubris who told his board of
directors only what they wanted to hear, and an absolutely dogshit business
plan. Most importantly, however, RealNames failed because Mr. Teare
deliberately engaged in a "drive off the cliff" strategy with respect to
Microsoft -- he placed all of his eggs in the Microsoft basket, and then
proceeded to alienate his now sole distribution partner by constantly
failing to abide by the terms of the agreement that he signed. Mr. Teare
did this despite repeated warnings from Microsoft and his own management team
that his dangerous tactics would almost certainly result in a non-renewal of the
agreement.

Now that the car has
plunged off the cliff, Mr. Teare is looking for others to blame.

Let there be no mistake
about it, RealNames' failure to persuade Microsoft to sign a new agreement for
the distribution of its Keyword service was the immediate cause of the company's
shutdown. But you cannot understand the motivations behind Microsoft's
decision unless you also understand the history of the parties' relationship, the operative terms of the agreement,
and how RealNames, under Mr. Teare's direction, flouted the terms of that
agreement and then was surprised to find out that its lifeline was severed. Mr. Teare has his version of this
history, and then there is the real story.